At the stroke of midnight, the country is all set to usher in the biggest tax reform in its fiscal history – the Goods and Services Tax reform (GST).
The bill has caused a fair bit of furore over the last few months, although the ball was actually set rolling 17 years ago, when Prime Minister Atal Bihari Vajpyee introduced the concept, and set up a committee headed by the then WB Finance Minister, Asim Dasgupta to design a GST model.
“The GST Network is the IT system behind the GST, and is expected to process 3 billion transactions every month.”
Since then, the bill has been through a fairly interesting journey, with leaders who initially opposed it jumping on to the bandwagon now. Interestingly, the then Gujarat CM, Narendra Modi opposed the bill saying the state would incur losses worth Rs 14,000 crore every year due to GST.
CIO India highlights the voices of industry experts and the top industry players to get a read on what GST actually spells out for the IT/ITES space.
Aravind Ramamoorthy, Partner at PwC, shed light on the opportunities opening up for IT companies.
He pointed out that the GST Network (GSTN) is the IT system behind the GST, and is expected to process three billion transactions every month. It's projected that India's seven to eight million direct tax payers will be required to file up to 37 tax returns in a year.
"This means every organization that's making a B2B sale has to upload the invoice into the GST network. This kind of magnitude has never been seen anywhere in the world," says Ramamoorthy.
He goes on to say that more than 10,000 to 12,000 tax officials would be accessing this system, take the data, and work with companies in terms of returns.
So the GSTN and the IT systems are in the center and every company has to upload their invoice into this system. Every vendor also has to input its invoices. That means, purchases have to tally with what the vendor inputs.
GST is about to transform the way in which India Inc. does business and the way entire globe deals with India Inc.
Rajeev Dimri, Leader-Indirect Tax, BMR and Associates LLP
"So in one network, your vendor uploads its invoice, you're going to upload your invoice, and companies are going to use this to make payments. So, one infrastructure is going to be used by all stakeholders," says Ramamoorthy.
He added that the GST is also going to provide a huge amount of business intelligence, analytics and dashboards, both to companies, as well as the tax officials. This gives you an idea about the sheer volumes of data that the GSTN will be churning out, and subsequently, the IT support needed to fuel this juggernaut.
Now this, Ramamoorthy surmised, opens up a host of opportunities for IT companies to step in and deliver their expertise.
For the GST rollout to be up to speed with the colossal volumes of transaction data flowing through, it's imperative for the GSTN to have a robust infrastructure and deliver performance that's reliable and free from glitches.
What tech leaders think about the GST rollout
Sumeer Chandra, MD, HP Inc. India believes that the GST will act as a catalyst to speed up the digitization drive across the nation, as small and medium businesses look to transition to a transparent tax system.
“As a longstanding partner in India’s digital transformation, HP continues to support the government and all stakeholders in enabling this reform and we are also offering an integrated GST solution that allows traders and MSMEs to make a smooth transition,” he adds.He goes on to say that with GST, PC adoption is expected to accelerate as they will play a pivotal role in enabling compliance and adoption of the new regime.
“The GST is also going to provide a huge amount of business intelligence, analytics and dashboards, both to companies, as well as the tax officials. This gives you an idea about the sheer volumes of data that the GSTN will be churning out, and subsequently, the IT support needed to fuel this juggernaut.”
Partner at PwC
Rohan Angrish, CTO at Capital Float, a digital finance company, says that GST is a whole tax and revenue construct, and as such provides limited additional avenues for disruption for technology companies.
However, he adds that when coupled with the GSTN, which will provide a tech layer on top of GST, the potential for impact by technology is formidable. “It will extend the ability of GSPs and ASPs to bring goods and services into the everyday lives of people in a quick and cost-effective way,” he says.
“Expect to see a whole host of technology services provided on top of the combined platforms of UIDAI, GSTN, Doc Vault, UPI and similar technology-first approaches to the administrative sphere of India,” adds Angrish.
Talking about the impact GST will have on the nation’s economy, Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP, says: “The discussions which were initiated in the closed walls of the Indian Parliament will now have a massive, and expectantly positive impact on the entire Indian economy. GST is about to transform the way in which India Inc. does business and the way entire globe deals with India Inc.”
Although he revealed that while some sections of the trade may not be in a celebratory mood, we need to be cognizant of the fact that every stupendous change in history has been met with strong resistance in one way or another.
“One cannot expect that a mammoth change like this will not make few people anxious or restless. It would also be appropriate to keep in mind that any policy or law that has come into being is not perfect and free from any lacunas on day one of its coming into force,” says Dimri.
He also points out that with the joint effort of the trade, legislature, and bureaucracy, even the GST law will evolve with time in a direction which would hopefully bring the country closer to a perfect GST model.